[blackcat] L1 Tim Tillson T3

20. Juni 2021

Level: 1

Background

T3 Moving Average is the responsive form of traditional moving averages. Presented in 1998 by Tim Tillson, T3 is also known as the Tillson Moving Averages. The thought behind the development of this technical indicator was to improve lag and false signals, which can be present in moving averages.


Function

The T3 indicator performs better than the ordinary moving averages. The reason for this is T3 Moving Average is built with the EMA (exponential moving average).
Its calculation is based on the sum of single EMA, double EMA, Triple EMA, and so on.
This gives the following equation:

T3 = c1*e6 + c2*e5 + c3*e4 + c4*e3…

Where

e3 = EMA (e2, Period)
e4 = EMA (e3, Period)
e5 = EMA (e4, Period)
e6 = EMA (e5, Period)
a is the volume factor, with a default value of 0.7 but you can also use 0.618

c1 = a^3
c2 = 3*a^2 + 3*a^3
c3 =6*a^2 – 3*a – 3*a^3
c4 = 1 + 3*a + a^3 + 3*a^2

When a trend appears, the price action stays above or below the trend line and doesn’t get disturbed from the price swing. The moving of the T3 and the lack of reversals can indicate the end of the trend. The T3 Moving Average produces signals just like moving averages, and similar trading conditions can be applied. If the price is above the T3 Moving Average and the indicator moves upward, this is a sign of a bullish trend. Here we may look to enter long. Conversely, if the price action is below the T3 Moving Average and the indicator moves downwards, a bearish trend appears. Here we may want to look for a short entry.

Key Signal

Price --> Price Input.
T3 --> T3 Ouput.

Remarks

This is a Level 1 free and open source indicator.

Feedbacks are appreciated.

Versionshinweise

OVERVIEW
The L1 Tim Tillson T3 indicator is a comprehensive trading tool that combines the T3 Moving Average with advanced divergence detection capabilities. This script provides visual signals for potential trend reversals through both regular and hidden divergences, making it valuable for traders seeking to identify market turning points.

FEATURES

• T3 Indicator: Calculates a smoothed moving average using the Tim Tillson T3 algorithm
• Divergence Detection: Identifies both regular and hidden bullish/bearish divergences
• Visual Alerts: Displays clear BUY/SELL signals with colored labels
• Customizable Parameters: Allows adjustment of key settings like period length and lookback ranges

HOW TO USE

Setup:

Select your preferred price source (default: Close)
Adjust T3 Period and vFactor parameters as needed
Configure divergence detection parameters
Interpretation:

Look for BUY signals when price crosses above the T3 line
Watch for SELL signals when price crosses below the T3 line
Monitor divergence indicators for potential trend reversals
Alerts:

Enable alert conditions for automatic notifications
Customize alert messages as desired
PARAMETERS

Price Source: Choose which price data to analyze
T3 Period: Controls the sensitivity of the T3 indicator
vFactor: Affects the smoothing of the T3 calculation
Pivot Lookback: Defines the range for detecting divergences
LIMITATIONS

• Divergence detection may produce false signals during choppy markets
• Best suited for trending markets rather than ranging conditions
• Results may vary across different timeframes and instruments

NOTES

The indicator uses the Tim Tillson T3 algorithm for more responsive trend following
Divergence detection includes both regular and hidden patterns
Alert conditions can be customized for specific trading strategies